With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are advertising, diversified outsourcing services, and financial data services.

Fortune Sector Leaders: Business Services

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-462-ABM Industries

Starting out as a simple window cleaning business in 1909, the company now provides facility maintenance internationally in areas such as janitorial services, electrical, groundskeeping, and transportation.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-462-ABM-Industries

This facility management corporation is headquartered in New York.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

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In 1909, Morris Rosenberg began work as a window washer in San Francisco. He grew his business, named it American Building Maintenance Company, and soon expanded beyond just cleaning to other facility maintenance services, including electrical engineering and HVAC installation. The company went public in 1965 and renamed itself to ABM Industries in 1994. Now its customers include retail businesses, aviation companies, and even school districts.

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Q4 2024

ABM Industries (ABM): Company Profile, Stock Price, News, Rankings

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ABM Industries

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Greetings, and welcome to the ABM Industries Incorporated 4th Quarter 20 24 Earnings Call. At this time, all participants will be in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce Paul Goldberg, Senior Vice President, Investor Relations.

Good morning, everyone, and welcome to ABM's Q4 2024 Earnings Call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM. With me today are Scott Salomeres, our President and Chief Executive Officer and Earl Ellis, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our Q4 and full year 2024 financial results as well as our 2025 outlook. A copy of that release and an accompanying slide presentation can be found on our website abn.com.

After Scott and Earl's prepared remarks, we will host a Q and A session. But before we begin, I would like to remind you that our call and presentation today contain certain predictions, estimates and other forward looking statements. Our use of the words estimate, expect and similar expressions are intended to identify these statements, and they represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in the slide that accompanies our slide presentation as well as our filings with the SEC.

During the course of this call, certain non GAAP financial information will be presented. A reconciliation of historical non GAAP numbers to GAAP financial measures is available at the end of the presentation and on the company's website under the Investor tab. And with that, I would like to now turn over the call to Scott.

Thanks, Paul. Good morning and thank you all for joining us today to discuss our Q4 results and fiscal 2025 outlook. ABM finished the year on a high note, driven by double digit revenue growth in Technical Solutions and Aviation in the Q4 and our performance also reflects the continued resilience of our Business and Industry segment. We posted 3% organic revenue growth and delivered adjusted EPS of $0.90 both of which were moderately above our expectations. These results capped a great year for ABM, highlighted by strong execution on our elevated initiatives, balanced capital deployment and more importantly, positive results in a volatile macro environment.

I'm thrilled with ABM's positioning as we begin fiscal 2025. We have emerged a stronger company after navigating through some macro turbulence over the last couple of years. And although it's still early, it appears as though our key commercial real estate markets are near an inflection point and returning to growth. Market improvement, coupled with the strategic investments we've been making across our business, gives me confidence in our future growth trajectory and our enhanced ability to service clients in dynamic markets. Before we discuss 2025, let me quickly run through a few of our important accomplishments in fiscal 2024.

First, we achieved remarkable results in our Technical Solutions and Aviation segments in 2024. The big story in Technical Solutions, which grew 16% organically, was a rapid expansion of our microgrid service line, complemented by growth in our data center related business. Our RavenWolf team did a fantastic job executing on a very complex microgrid project schedule, which shows no signs of abating. This strong growth helped drive an increase in full year segment earnings. Our Aviation business grew 12% in 2024 as we benefited from healthy travel markets and also from our truly differentiated service offering ABM Clean.

Our strategy of offering a more comprehensive service solution coupled with differentiated artificial intelligence based technology is supporting growth in excess of the broader aviation market. I was also pleased with BNI's results, which significantly outperformed the expectations we headed into 2024 with. Organically, revenue was down less than 1% for the year, benefiting from our diverse client and service mix, our leading market position and our penetration in the higher performing Class A segment of the market. Additionally, our geographic diversification, including the U. K.

And the continual focus on growth also contributed to driving our results. We also made significant progress on our internal initiatives in 2024. One key accomplishment was the introduction of our workforce productivity optimization tool. This tool, which allows our team to identify opportunities for productivity improvements based on the facility archetype has been an enabler to reducing our labor usage. Labor as a percent of revenue was down nearly 1% in the 4th quarter.

And while there are many factors that contributed to that, the workforce optimization productivity rollout played an important role. This tool, when more broadly implemented, offers significant opportunities to manage labor more efficiently across our service base. We also further commercialized ABM Clean and ABM Performance Solutions during the year. As a reminder, ABM Clean is our AI based purpose built application for the aviation industry. ABM Performance Solutions is our technology driven multi service offering that integrates data from multiple sources to allow our teams to deliver enhanced outcomes for our clients and their customers under a single service contract.

Both are gaining momentum across our portfolio and clients utilizing these offerings now represent a meaningful portion of 2024 revenue. Lastly, in addition to what I've already mentioned, we've made some important early investments in artificial intelligence. We see many use cases across ABM, including expanding revenue opportunities through data mining, quicker response times and enhancements on RFPs at our deal desk and delivering an improved employee experience through HR platforms. Though it's early days, we are convinced these investments will provide critical differentiation as we move forward. From a capital allocation perspective, we were quite balanced in 2024.

We repurchased $56,000,000 of stock at an average price of under $48 per share and we continued our long standing record of raising our annual dividend. In fact, after the quarter ended, our Board of Directors approved an 18% increase on our dividend, which underscores confidence on our long term earnings trajectory and also brings us closer to our 30% of adjusted net income payout target. We simultaneously invested for the long term by acquiring quality uptime services, which expands our position in the faster growing data center vertical by adding new capabilities in uninterrupted power supply systems and battery maintenance. Now let's look forward to 2025 and walk through our end markets, so we can highlight why we are encouraged about the coming year and the longer term. With respect to B and I, a recent JLL research report suggests that the tide is beginning to turn for the U.

S. Commercial real estate market as availability rates declined for the first time in several years, reflecting an acceleration in leasing activity and a slowdown of new supply. The report went on to detail that leasing activity continued to grow in the 3rd calendar quarter, while office downsizing has normalized as tenants have become more comfortable with their footprint. The other positive dynamic is that employers continue to drive greater office attendance. According to the same JLL report, office attendance policy amongst the Fortune 100 drove the average weekly office requirement up to 3.3 days.

As has been broadly reported, these policy shifts towards in office work are likely to continue. For those reasons, we are confident that our B and I segment will return to growth soon, potentially in the back half of twenty twenty five. We expect our manufacturing and distribution markets to be healthy in 20 25, 25, driven by a strong U. S. Industrial economy and by secular growth in the U.

S. Semiconductor and data center markets. The World Semiconductor Trade Statistics Organization expects 15% semiconductor growth in the Americas in 2025 and the data center services market is expected to grow 10% annually for the next several years according to a Research and Markets Report publication. We have continued to win new business in these end markets and have invested important resources to further leverage these trends. I am confident that our M and D segment will return to mid single digit organic growth once forecasted new wins come online and the impact of the rebalancing of a large and complex client we have previously discussed moderates targeting by the end of the year.

As I mentioned, Aviation had an amazing year, leveraging healthy travel markets and their differentiated service offerings. They also benefited from numerous capital projects across the country as both public and private entities work to refresh and revitalize aging U. S. Airport infrastructure. LAX, LaGuardia, JFK and O'Hare are just a few examples of where these kinds of projects are happening.

Our clients at these refreshed facilities place a higher emphasis on maintenance and the traveler experience as they seek to drive traffic and revenue, which completely aligns with ABM's strength and focus. This secular investment cycle should provide a multitude of opportunities for us over the next several years. Looking to next year, a recent air passenger forecast report indicates North American air passenger traffic is forecasted to grow approximately 5.6% in 2025 after expected growth of 9.2% in 2024. So markets remain constructive, but not quite as exuberant as this past year. Our pipeline is healthy, but sales cycles tend to be longer in aviation than in other parts of our portfolio.

So the back half of the year may be stronger for us from a growth perspective. Education is expected to be stable and continues to provide a foundation of earnings and cash flow that can be utilized across ABM. Over the past couple of years, we have been focusing on the more substantial revenue opportunities afforded by our APS offering. Sales cycles tend to be longer for these types of prospects that benefit from APS, namely larger school districts, colleges and universities, and we've been steadily building a nice client resume. The other benefit of APS is it creates customer stickiness and is additive to margin, reflecting the enhanced value we deliver when we bundle services.

This approach helped us outgrow the market in 2024 as we posted 3% organic growth for this business for the full year and delivered a margin of 6.1%. Lastly, regarding technical solutions, we expect our microgrid business will continue to remain healthy in 2025, driven by strong market conditions and a backlog exceeding $500,000,000 In fact, we booked well over $100,000,000 in new orders in the 4th quarter, including additional work for a leading big box retailer and new battery energy storage systems for an emerging private renewal power system developer. According to the firm Research Nestor, the U. S. Microgrid market, which was approximately a $10,000,000,000 market in 2024 is expected to grow to $50,000,000,000 over the next decade, providing significant runway for us.

This growth will be fueled by increasing energy consumption due to the proliferation of AI, the fragility of the electrical grid and from organizations looking for ways to more efficiently manage electrical demand and storage. Additionally, we expect the rapid acceptance and expansion of AI will drive significant growth in data center and mission critical infrastructure, and we have a growing position in this market. It's still too early to say what impact, if any, the new administration's policies with regard to interest rates and energy policy will have on our bundled energy solutions and EV service lines, we were hopeful that general demand trends will tick up over the next year or 2. All in all, we see ample room for growth in technical solutions to ensure a strong 2025. To sum it up, we feel good about our markets and expect to grow revenue, adjusted EPS and adjusted margin in 2025.

As such, we expect adjusted EPS to be in the range of $3.60 to $3.80 and for our adjusted EBITDA margin to be in the range of 6.3% to 6.5%. With that, let me turn it over to Earl to walk you through the details and I'll be back shortly with some final comments.

Good morning, everyone. As Scott mentioned, we are pleased with our Q4 and full year results and we believe we are well positioned for growth in 2025 and beyond. But before we get into our 2025 outlook, let me quickly review our 4th quarter results. For those of you following along with our earnings presentation, please turn to Slide 5. 4th quarter revenue of $2,200,000,000 increased 4% comprised of 3% organic growth with the remaining 1% driven by our 3rd quarter acquisition of Quality Uptime Services.

Organic revenue growth was once again led by Technical Solutions and Aviation, which grew 25% and 11% respectively. Education was essentially flat. Our B and I segment remains resilient declining less than 1%, benefiting from our diverse client and service base. Lastly, manufacturing and distribution revenue came in above our expectations, declining by only 1%. Moving on to slide 6, we recorded a 4th quarter net loss of $11,700,000 or $0.19 per share as compared to net income of $62,800,000 or $0.96 per share last year.

This result was primarily attributable to a $59,700,000 adjustment to our contingent consideration related to the RavenWolf earn out, the negative impact of prior year self insurance adjustments, legal settlements, higher corporate investments and lower segment operating earnings, partially offset by lower income tax. The earnout adjustment was driven by RavenWolf's very strong 2024 performance and reflects our current estimate of the payout under the acquisition earnout plan. I will discuss RavenWolf's performance in greater detail in a few minutes. Adjusted net income of $57,500,000 and adjusted earnings per share of $0.90 decreased 13% and 11% respectively from the prior year. In addition, adjusted EBITDA decreased 11% to $128,000,000 and adjusted EBITDA margin was 6.1%, down 110 basis points.

These decreases were largely driven by lower segment earnings, which I'll discuss shortly, as well as some planned increases in corporate costs versus a tough comparable last year. Adjusted EPS benefited from lower share count driven by our share repurchase activity. Now turning to our segment results beginning on Slide 7. B and I revenue of $1,000,000,000 declined less than 1% as the segment continued to prove resilient. This was driven by our diversification including our geographic footprint, exposure to the sport and entertainment and healthcare markets and from our mix of higher performing Class A properties.

As Scott mentioned, macro commercial real estate data is improving, especially leasing activity. We are hopeful these positive dynamics along with our sales initiatives will drive BNI's inflection to organic growth later in 2025. BNI's operating profit was down approximately $13,000,000 to $72,000,000 and the operating margin was 7%, a decrease of 120 basis points. These declines were primarily attributable to an unfavorable $7,000,000 year over year impact from the adjustments to insurance reserves and also included approximately $4,000,000 to $5,000,000 of other discrete costs. Aviation revenue grew 11% to $276,500,000 driven by strong travel markets and new business wins from both the airport and airline sides of the business.

We are proud of the fact that Aviation set a new record in 2024 surpassing $1,000,000,000 and servicing 27 of the 30 busiest U. S. Airports. This was achieved in large measure by offering differentiated services supported by our amazing team. Aviation's operating profit was $18,600,000 up 14% and margin was 6.7%, an increase of 10 basis points.

These improvements were largely driven by operating leverage on higher revenue. Turning to Slide 8, manufacturing and distributions revenue declined by just under 1% to $387,700,000 primarily due to the rebalancing of work by a large e commerce customer and by our choice to exit a sizable client, which did not meet our financial hurdles, largely offset by growth from other clients. The rebalancing has been less impactful than initially expected as the client has been hesitant to make changes at the pace originally communicated. As Scott mentioned, we see a clear path back to mid single digit organic growth by the end of 2025. Operating profit slightly decreased to $40,400,000 and operating margin was 10.4%, down 30 basis points.

Profit and margin performance principally reflects mix as well as increased investments in sales related positions to drive growth in target markets like semiconductors and data centers. Education revenue was up slightly at $230,000,000 as the onboarding of new clients more than offset reduced activities at a number of cost plus accounts. Education operating profit increased 28% to $13,100,000 and margin was 5.7%, an increase of 130 basis points. This was largely attributable to improved labor efficiency and mix. Technical Solutions revenue grew 35% to $257,400,000 including 25 percent organic growth and 10% from our acquisition of Quality Uptime Services.

Organic growth was driven by extremely strong microgrid project activity and continued growth in our mission critical business, while bundled energy solutions and EV project activity remains soft. Our microgrid business had a phenomenal 2024 with revenue and earnings both up 2.5 times compared to the prior year. Looking forward, demand from our energy resiliency and data center markets should remain robust, supported by our year end backlog of over $500,000,000 Technical Solutions operating profit grew 15% to $28,000,000 which included a $4,300,000 cost associated with the remediation of a past energy performance contract. Operating margin was 10.9%. Excluding the previously mentioned $4,300,000 cost, margin would have been 12.6%, twenty basis points below last year.

We ended the 4th quarter with total indebtedness of $1,400,000,000

of standby letters of credit, resulting in a total debt to pro form a adjusted EBITDA ratio of 2.6 times. At the end of Q4, we had available liquidity of $488,200,000 including cash and cash equivalents of $64,600,000 Free cash flow in the Q4 was $15,000,000 This result, which was $106,000,000 below last year, reflected a build in working capital related to supporting the company's strong growth, especially at ATS in the final month of the fiscal year. For full year 2024, we generated $167,000,000 of free cash flow or $217,000,000 after normalizing for in year Elevate and integration costs of $49,000,000 This is down $87,000,000 from last year's normalized free cash flow of $303,000,000 which is adjusted for the receipt of $24,000,000 in employee retention credits, a $66,000,000 repayment of the CARES Act and in year elevate and integration costs of $71,000,000 Free cash flow generation remains a key focus in 2025, driven by our asset light and flexible business model. Interest expense was $21,800,000 slightly higher than the prior year, largely reflecting our recent acquisition. Regarding capital allocation, we purchased a little over 610,000 shares in the 4th quarter at an average cost of $52.42 per share for a total cost of $32,000,000 For the full year, we repurchased approximately 1,200,000 shares at an average cost of $47.86 per share for a total cost of $55,800,000 At year end, we had $154,000,000 remaining under our share repurchase program.

Dallas Capital Allocation continues to be a hallmark of ABM. For the full year, we returned about $113,000,000 to shareholders in the form of dividends and share repurchases and spent $114,000,000 on acquisitions. Now let's move on to our fiscal 2025 outlook as shown on Slide 10. As Scott mentioned, we are excited about our 2025 plan and we expect to grow revenue, adjusted EBITDA and adjusted EBITDA margin on a year over year basis. Beyond that, 2025 is an important year as we expect our 2 largest segments, B and I and M and D will return to growth in the back half of the year assuming recent market trends continue.

As such, we are forecasting full year 2025 adjusted EPS to be in the range of $3.60 to $3.80 At the midpoint, this represents a 4% increase over our 2024 adjusted EPS of $3.57 Adjusted EBITDA margin is expected to be between 6.3% and 6.5% for the full year, up 20 basis points at the midpoint versus the 6.2% we posted in 2024. Our interest expense forecast is $76,000,000 to $80,000,000 down from the $85,000,000 we incurred in 2024. We expect the normalized tax rate before discrete items to be between 29% 30%. Moving to free cash flow. Full year normalized free cash flow is anticipated to be in the range of $250,000,000 to $290,000,000 This forecast is normalized for an estimated $30,000,000 to $40,000,000 of Elevate and integration costs and $16,000,000 of the total earn out payment that will be recorded as a use of operating cash.

The remaining $59,000,000 of earn out will be recorded as cash used from financing. As is normally the case, we expect free cash flow to be stronger in the back half of the year. With that, let me turn it back to Scott for closing comments.

Thanks, Earl. I want to take a moment to congratulate our team on a great 2024. Their tireless efforts enable us to consistently exceed our internal plans throughout the year, which is even more exceptional given the fact that we've been working tirelessly on upgrading and transforming our technology and data platform as well as our end to end processes. Through it all, we remain committed to our clients and to our longer term financial goals and most importantly to our strategy of investing in our business. We're excited about our positioning as we begin 2025 and by the progress we've already made on several initiatives.

Thanks again for joining our call today. And with that, let me take some questions.

Thank you. We'll now be conducting a question and answer session. Our first question is from the line of Tim Mulrooney with William Blair. Please proceed with your questions.

we were expecting, I guess, because the customer rebalancing wasn't as large as initially expected. Can you help frame this for us? What was the headwind you were originally expecting from the rebalancing and what your base case scenario is at this point?

Yes. So we did better than expected through the rebalancing, but it's not over yet. There's still another phase that's going to happen in fiscal year 2025 for us, actually 2 more phases that we have to get through, but we've done really well. And in addition to that, we've actually picked up new sites as the client has grown. So, yes, it just turned out better than we expected, but we're not calling it quite yet, Tim, just because we have to get through the next two phases this year, but we're optimistic because I think we've been really consistent with saying that this was more of a philosophical change, not a reflection on our performance.

And as such, we've just been continuing to grow with the client as that client opens up new sites. So it's been a great story.

Understood. That's good to hear. So not through it yet, but things are looking up. That's good color. Thanks, Scott.

And then just one more from me on the technical solutions business. Could you just expand a little bit more on that $4,000,000 remediation charge on the energy performance contract? I mean, does this happen from time to time? Or is it a rare occurrence? Is there a reasonable expectation for more of these types of charges in the future, just the nature of the business or is this more truly like a one off situation?

This rarely happens, Tim, rarely happens. This is an anomaly. I'll let Earl take you through it. But this is something that we rarely ever see.

Yes. This was a technical issue with 1 of a portion of an installation. So this was actually part of a broader installation that actually started in 2018. So it was a $50,000,000 project. Again, we actually had a fail on a portion of it.

And as a result of that, we needed to remediate the customer. But as Scott mentioned, this is a very rare event.

Our next question is from the line of Andy Wittmann with Baird. Please proceed with your question.

Great. Thanks. Excuse me. So I wanted to just ask another couple of things just to help clarify the quarter a little bit. I think Earl in the B and I segment, I think you said there was $4,000,000 to $5,000,000 of discrete costs in addition to some of the other things you talked about in the quarter.

But I was kind of curious about the discrete costs. Are you meaning to say that those are one time costs or somehow otherwise discrete? Maybe some color on what that was and would help give some context around that. Thanks.

Yes. Thanks for the question, Andy. Yes, those are kind of like what I would say were one time discrete expenses, most notably just a handful of legal settlements that we trued up in the quarter as well as a bad debt reserve, where just a series of small things that actually came up to about $45,000,000

Okay. And but those were added back in the adjusted results. Is that correct?

They were at no, those were actually in the above the line. Yes. So those were not below the line numbers. Those were actually numbers that actually hit our SG and A above the line.

Okay. Yes, because sometimes you add back legal settlements and so

Yes. And again, typically those would be very large legal settlements that we'd actually put below the line. These were a series of smaller ones that would actually accrue for above the line.

Okay. All right. And then I guess there was a comment here that the free cash flow in 2025 is going to be impacted by $30,000,000 to $40,000,000 of I don't know what you call it, I guess maybe transformation costs. So I was hoping maybe you could expand on that a little bit. So I think previously the Elevate program was looking for maybe a $25,000,000 impact to fiscal 2025.

So it looks like it's a little bit bigger. So I was wondering, if this is just like this is the cost the new cost estimate for the same or if you're doing more and if you're doing more what you're doing?

Yes. No, this will be the new cost estimate for the same. If you recall originally we had said that Elevate would be about $150,000,000 to $180,000,000 We've actually since taken that up to about $205,000,000 to $215,000,000 So what you're seeing actually reflects the higher costs. And again, we've probably spent near 80% of that total. So what you're actually seeing is literally the residual wind down over the next 18 to 24 months.

Okay. That's helpful. And then maybe Scott, just for you, in the 20 basis points of margin expansion that you're anticipating for 2025, are there other investments that are going in that holding that one back? Or do you feel like with the top line growth that you're getting and the leverage that you get out of the Pure platform really of your SG and A costs primarily, is that the right way to be thinking about annual expansion? Or do you feel as you finish up the remainder of Elevate that maybe annual margin expansion can expand beyond the 20 basis points that's implied for 25?

Yes. We do. We think it can expand. And if you remember, we put out a aspirational target of 7% on EBITDA margins. And we do believe we're on a path to that.

The Elevate spend is largely behind us, but the benefit is just beginning, right? Because part 1 is getting your data platforms all updated and upgraded, but part 2 is then building the tools on top of that. So the people out in the field can get insights and solutioning. So that's just beginning and we've gotten a fair number of benefits already, but there's more to come.

Okay, great. Those are all my questions for today. Have a happy holidays guys.

Our next questions are from the line of Josh Bibb with Truist Securities. Please proceed with your questions.

It's actually Jasper Bibb on. And then in prior remarks, you mentioned expecting total revenue to grow in fiscal 2025. Just kind of hoping you could put a finer point on what that might look like from a growth rate perspective and cadence through the year, but some of the factors you cited, it sound like overall, it's going to be a stronger back half than the first half, but just a little bit more detail there would be great.

Yes. I mean, look, we're optimistic that it is going to be a growth year. When you look at our end markets, we're just seeing great white space. I think the one that is still in question is B and I, right, in terms of when we'll see that inflection back to growth. But all signs are pointing positive.

And you probably heard in my prepared remarks, I talk about hoping that the back half of the year is when we start turning to growth, which will be a big deal for us, right? Because that's always a segment that grows at GDP. And the fact that we were down 1%, that's a meaningful impact versus GDP, which could be 2% to 3% in that range. So we're hoping that's an upward trajectory. And then M and D is going to be a flattish story this year and but the hope is to return back to year over year growth in Q4, but really meaningfully in 2026.

So, aviation is going to be strong. We had double digit growth in 2024. I think we're going to have very solid growth in 2025. Educational will keep being that steady grower. And ATS, I'm very confident ATS is going to have double digit growth again in 2025.

So really optimistic about the growth platform. And I would cap it off by saying, we achieved $1,700,000,000 in new sales in 2024. I think it's our 6th or 7th year of consecutive record breaking sales. So really excited about the platform from a growth trajectory.

us on what the ERP roadmap looks like for fiscal 2025? When will the remaining segments be moving on to the new platform and any expectations for associated cost savings there in your as part of your healthy targets?

Yes. Thanks for the question. So we actually just deployed the new system for our largest industry group B and I as well as M and D.

So we now actually have 3 of the IGs wrapped up. And so we anticipate the next ones will roll out over the course of the next 12 months to 18 months. And as a result of that, we should have everything kind of like in place, I would say, by the beginning to middle part of FY twenty twenty six.

Last one for me, just hoping you could outline what you're seeing on labor costs inflation and recovery rate at this point relative to I guess what's considered historical norms?

Yes, I think labor costs have moderated. I think we've been consistent in talking about that through 2024. It's definitely 100 basis points or so step down from where we were in 2023. And the positive thing for us is, if you remember, half of our revenues come from collective bargaining agreements on union arrangements. And virtually all of those agreements were settled in the last 12 to 18 months.

So we have really high predictability on labor costs in 2025 beyond actually 2025 through 2017. And it's all at rates that we believe are recoverable from clients without a lot of irritation, not necessarily where we were in 2021 2022 when we had high labor inflation. So we feel like we're in a really good place from a labor inflation standpoint.

Okay, great. Thank you for taking the question.

Our next question is from the line of Josh Chan with UBS. Please proceed with your questions.

Hi, good morning, Scott and Earl. Maybe picking off that on that labor inflation theme, does productivity continue to be positive in 2025? And how much does that contribute to your 20 basis points of margin improvement? Is that one of the more meaningful driver you expect?

Yes. I mean, look, I think one of the tailwinds we have is our Elevate investments on our workforce productivity optimization tool, which is just starting to roll out and we're starting to see good benefit on that. Because for us, right, the vast majority of our expenses is all labor, right? So the more proficient we get at that, the more we get to accelerate. So when you see us moving up the chain on EBITDA margin, it's largely going to come from being efficient on labor.

And we just it's going to take another 12 months to 24 months to completely roll out those tools, but really optimistic about what we're seeing.

Great. Thank you, Len. And on ACS, the margins have been very different quarter to quarter this whole year. And so I know that you're ramping up a big project, you got an acquisition in there. So could you just talk to maybe what the normalized or expected margin trajectory within ATS is going to 2025?

Yes. ATS margins are actually the volatility that you actually mentioned are usually driven by mix of business, obviously with the micro grids probably have more of a higher margin and as you've actually seen that business really pick up. But I would say that if you were to look at normalized margins going out, you'd be looking at high single digit margins.

Great. Thank you. Thank you both for the color and good luck on next year.

Our next questions are from the line of Faiza Alwy with Deutsche Bank. Please proceed with your question.

ABM Industries (ABM) Q4 2024 Earnings Call Transcript

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